Community focus

Wells Fargo South Florida Region President Joe Atkinson discusses the importance of community for large banks and small business alike

What are the notable growth trends in South Florida?
Small business is the engine that drives South Florida, and we are excited to be part of what’s happening here. Over 90 percent of businesses in this market are small and medium enterprises (SMEs). For Wells Fargo – a leading bank in South Florida in terms of deposits held, as well as the number-one small business association (SBA) lender of loans under $100,000 – the importance of SMEs to our bottom line cannot be overstated.
 The sectors exhibiting the most growth in this mar-ket are hospitality, construction, and those providing products and services to Latin America. In South Florida, Wells Fargo has been growing in small business banking – this is where we have been hiring the most personnel. We are also paying attention to a number of up-and-coming areas. For instance, we are seeing great growth potential in Doral and looking to expand our reach to that market.
 Miami-Dade is a highly dense market, and understanding that dynamic is key. If you drive by any one of our streets you will see small businesses clustered together in a fairly small space. That is a good indicator of both the professional and community growth that has led to a very large and stable deposit base in South Florida from a community and retail banking perspective.
 
How has post-recession lending reduced risk, while still providing adequate financing for homebuyers?
We have learned a lot from the Great Recession. We are better capitalized today and more cautious when it comes to mortgages, where in the past we may have been too aggressive. To do this we have had to remain close to our customers to make sure we understand their needs. Moreover, we have invested greatly in ensuring greater adherence to compliance procedures.
We also recognize that the density and growth of the market is a challenge to affordable housing and that we need to be proactive in helping provide housing options through community partnerships. For example, Wells Fargo has provided a significant investment to finance a 158-unit, low-income affordable housing project in Overtown.
 
What innovations have area banks implemented to adapt to an increasingly digital marketplace?
We hear that brick-and-mortar banking is dying, but the reality is that it is not going to go away. From this perspective, we are looking at developing technologically functional, eco-friendly neighborhood branches that integrate online, text and mobile banking technologies that can provide access to customers when they need their money, when they want to borrow and when they want advice, outside of normal business hours.

Local and global

Mel Martinez

JPMorgan Chase & Co. Southeast U.S. and Latin America Chairman Mel Martinez discusses the blurring of the local and international in South Florida’s banking sector

As it pertains to the banking sector, what sets South Florida apart from other major U.S. markets?
South Florida is an economy dominated by small and medium enterprises, which means the middle market there is the predominant segment for us. South Florida also has a high concentration of high-net-worth individuals, which provides a strong base for our private banking business. In Miami, there is a strong international presence. While we predominantly service domestic clients, at times it is difficult to distinguish between what is local and what is international. Many aspects of local businesses are international, while many Miami-based businesses are actually branches of international businesses.
 
What developments in Latin America most influence Miami’s banking industry?
Mexico and Brazil have traditionally been the dominant economies in the region, but in the last two years growth in both countries have slowed and we saw a slight decrease in business from both. However, we are excited about the reforms the Mexican government has taken recently – in the areas of energy, education, tax reform – all of which we believe will make Mexico a very attractive place for business, investments and banking.
We anticipate an increase in trade activities coming to and from the region, which will undoubtedly have a profound impact on banking. This is due to the expansion of the Panama Canal, but also the free trade agreements we have entered into – NAFTA, CAFTA-DR, bilateral agreements with Chile and Panama – all of which enhance trade and commerce, and Miami is the largest participant and beneficiary from all of that commercial activity.
 
How do you see the executive action on Cuba impacting banking and commerce in Miami?
The biggest problem is how little we got in return.  Further, as it goes into implementation, the complexity of dealing with the Cuban government appears more clearly.  In the long run, I hope whatever our government does will improve the lives of the Cuban people, including the human rights conditions.
Ultimately, Cuba could be a great trade and commercial partner for South Florida and Miami. That will only happen when conditions for rule of law, including property and labor rights exist in Cuba.
 
What are the key components of JPMorgan Chase & Co.’s medium-term strategy for South Florida?
We will continue to consolidate the different lines of our business to better serve the client end to end; grow our market share and deepen our engagement in the community through our philanthropic and CSR initiatives.

Southern portal

Alex Wertheim

UPS Americas President Romaine Seguin discusses the strategic importance of South Florida as a critical trade and logistics pathway to Latin American markets

How is South Florida an advantageous logistics hub?
South Florida is the connection to Central America and South America, which are critical markets for us. The expanding middle classes in Latin America, along with healthy GDP growth and rising international influence, are creating attractive opportunities for commerce and investment. South Florida is a strategic location for American and European companies seeking to venture south to expand their business.
South Florida is an important northern entryway for Latin America as well. It’s amazing the quantity of perishables that come through here – just look at flowers. Over 90 percent of the flowers that enter the U.S. come through Miami. Flowers are the number one import, followed by other perishables, and after that fish. It is the starting point to feeding the U.S.
What are the areas of growth for the logistics sector?
One of our strategic imperatives is to capture more of the healthcare vertical in Mexico and throughout the Americas region. The medical equipment and biotechnology industries are experiencing tremendous growth and change, and these are the areas where our consumers are pushing us to go. The number of patents expiring each year continues to increase, which means that a generic, more affordable product is get-ting into the market.
It’s not an easy market to enter because of the complexities entailed, whether it’s related to temperature control, infrastructure or human capital. Moreover, the regulations and licensing requirements in each country are different; for instance, some countries require facilities to have a pharmacist on site.
 
What are some recent developments in trade policy?
The most recent free trade agreements (FTAs) the U.S. signed with entered into effect in late 2012, one with Panama and one with Colombia. Despite continuous political debate, there is a movement to take the barriers down and enhance free trade. What is important is to educate the private sector, especially companies here in South Florida who wish to expand their businesses to international markets, on what FTAs are and what they can mean for a company.
 
Within the logistics sector, what factors most impact cost of operations in South Florida?
The great expense in transportation in Latin America is the customs processes – they’re not automated and extremely tedious. Automation provides more security, more transparency, and more consistency. We are working with government officials to improve these procedures. For South Florida-based logistics companies, the bulk of whose business is trade with Latin America, these delays become quite problematic.

Striking a balance

Alex Wertheim

PortMiami Director Juan Kuryla discusses balancing the growth of the port’s two lucrative business lines – cruise and containerized cargo

How much of PortMiami’s business is comprised of the cruise versus containerized cargo segment?
Revenues are significant from both sides, with roughly 60 percent of the direct revenue to the port coming from cruise and 40 percent from cargo; however, cargo comprises nearly 80 percent of the economic impact to Miami-Dade County. The cruise industry is extremely significant, driving tourism and employment growth; it is the number one contributor to Miami-Dade’s hotel occupancy. In the fiscal year 2014, PortMiami had a record-breaking year, processing 4.77 million cruise passengers in our 45th consecutive year as the world’s largest cruise home port. We benefit from having Carnival Corporation, Royal Caribbean Cruise Lines, and Norwegian Cruise Lines – collectively comprising 75 percent of the global cruise market – headquartered in Miami-Dade County.
 
How will the completion of PortMiami’s Deep Dredge Project impact South Florida?
The Deep Dredge Project is a game-changer for this region. Upon the project’s completion in mid-2015, we will be the only U.S. port south of Virginia at a water depth of 50 feet. This will allow us to berth much larger vessels and reclaim some of the transshipment business we lost to ports in Panama and the Caribbean in the early 2000s.
This deeper draft capacity is of great interest to the large shipping companies, who save money, thus make money, by consolidating containers from multiple lines into a single larger vessel. The depth will enable us to capture new cargo business, particularly from Asia, on vessels that will now be able to transit the expanded Pan-ama Canal upon its completion in early 2016.
 
What is PortMiami’s strategy for the medium term?
Recapturing transshipment is a top priority. We lost much of this business after 9/11 because of high security-related costs and inspection protocols. Today we work closely with U.S. Customs and Border Protection to create a commercially friendly business environment at the port, while maintaining the highest standards of security. In conjunction with our partners at Florida East Coast Railway, we are targeting industries such as frozen poultry, beef, scrap metals, scrap paper, corn, soy, grains and other food products, to boost cargo volumes passing through the port.  Part of the port’s initiative is to export more loaded containers to complement the importation of products coming in from Asia and Europe. We also anticipate continued growth in trade to and from Latin America and the Caribbean as well as starting new trade routes with emerging markets such as India and Africa. On the cruise side, we are working on the construction of a new berth and terminal for completion within the next two to five years.  These improvements will expand our passenger capacity by approximately 20-25 percent.

Flying high

Alex Wertheim

American Airlines Senior Vice President for Mexico, Latin America and the Caribbean Art Torno discusses the significance of Miami as a transport hub for the Americas

How has establishing a hub in Miami contributed to American Airlines’ business? 
In 2014, we celebrated the 25th anniversary of our Miami hub. This was momentous for both American Airlines and Miami-Dade; today, over 70 percent of departures from Miami International Airport (MIA) are American Airlines flights. We are privileged to be an airline company here, as Miami allows us to link North America to the rest of the hemisphere. This linkage has contributed greatly to American Airlines’ growth in MIA. In 1989, we had 19 flights a day and about 200 employees. That same year, we purchased assets from Eastern Airlines, which gave us access to routes in Latin America and the Caribbean. That investment was one of the smartest decisions American Airlines has made in its 80-year history. Today, we fly over 340 flights a day, to 126 different destinations, and employ 11,500 people.
 
What have been some recent developments in government relations in the hemisphere?
We constantly work with governments to develop the demand, to create the market, for air travel, particularly in the Caribbean, where we engage in cooperative advertising, work with hotels and travel agencies, to generate demand. Government relations are also the means by which we develop new routes. A great ex-ample is Brazil, where we’ve worked with, not just the federal government, but local governments as well, to increase access to locations that were previously isolated. As a result, American Airlines now controls 42 percent of traffic from Brazil to the U.S., from which Miami greatly benefits.
 
One challenge for Miami-Dade aviation pertains to lengthy customs processing. How can this be addressed?
Lengthy customs procedures could deter travelers from flying to MIA, thus hurting tourism and commerce. Addressing this matter – which is significant – has meant collaborating with the county and U.S. Customs and Border Patrol (CBP) to add additional officers; look at new technologies and staffing models and share different profiles of customers.
Most international airports in the U.S. have a lower split between foreign customers and domestic. At MIA, there is a larger percentage of foreign arrivals, so if MIA is being staffed with the same models used for other international hubs in the U.S., that model would be inadequate because a larger portion of our customers need a deeper level of scrutiny. In the last two years, we as an airport community entered into a pilot program with CBP where we would collectively fund overtime hours for their officers during peak travel times. So far, this initiative has been successful and is now being rolled out in two or three other airports in the country.